But, I disagree with Mr Jones’ arithmetic. Scotland does receive a population ratio of what annual enhancement England receives. Traditionally this has been 10 per cent; it is only when Scotland is compared with the UK as a whole that his 8.4 per cent is relevant. If our block grant funding (which is where Barnett operates) is 20 per cent per head more than that of England’s equivalent, and we receive only 10 per cent, then there is a shortfall – we need 12 per cent to fully fund our higher level.
The intention of the financial constitutional changes, from Calman through to Smith, is that Holyrood should be more accountable, and raise more of the money we spend. But with the new regime the tax proceeds designated for devolving to Holyrood would come off the block grant. Gradually, Barnett effectively would recover what some term our “excess” funding.
I reckon we would need to raise income tax by 1p (£500 million) every two years to cover the Barnett shortfall, and would need to borrow to balance the budget.
The real challenge for Scottish Labour leader Jim Murphy on the hustings is to explain to the people he needs to vote for him how disadvantageous the Barnett formula, which Labour imposed in 1978, is to future funding.
Douglas R Mayer